I remember the summer of 1999 rather well. We were at the height of the dot-com boom, when companies offering little more than a bold business plan and a glitzy press pack were commanding valuations many hundreds of times their predicted revenue. Almost every night a new e-commerce venture was being launched at a lavish event and those of us lucky enough to work in tech PR played hard and worked even harder, while wishing we too had shares in the companies we were promoting.
The internet revolution was however short lived and in March 2000 the bubble burst and we crashed back down to earth. Investors were reminded a viable e-business had to be grounded in the real world and the phrase ‘clicks and mortar’ was born. Perhaps some of the millions of people who worked in the retail sector and shareholders in the likes of Dixons breathed a sigh of relief.
Fast forward to today and we can see that e-tailing didn’t disappear but has evolved and has leveraged advances in communications technology, logistics and data analytics to become integrated into almost every waking moment of our day. If you follow the money, online shopping is a global phenomenon and is the fastest growing segment of a £400 billion UK market. While new jobs are being created in warehouses, logistics and web development there is increasing concern as to where our high streets are heading. What does digital disruption mean for the 319,000 retail businesses that employ an estimated 2.8 million workers[1] and the local communities they serve?
Despite the challenging conditions, shopping is still the UK’s favourite pastime and underpins the UK’s economic model. What is clear though is how we shop is changing and we are at a tipping point where traditional retail may fall into decline, but there are also a myriad of opportunities for new ventures and growth. If we look at the current situation I think we can already see the future of retail will be driven by two divergent themes which unsurprisingly align with the model of the left and right brain.
Our left brain, which manages the rational purchases we need to make will be advanced by efficiency and driven by algorithmic innovation and artificial intelligence. Any analysis of our shopping history will provide some vital insights as to what we like and need, our shopping habits and our preferred channels. This will be augmented by smart products and geo tracking and big data will be crunched at alarming rates. Hyper personalisation will leave us in no doubt a cloud somewhere knows more about our left brain than we do.
The battleground of innovation and efficiency will be fierce and I fear we will see many casualties as the sector consolidates. The barriers of entry to the left brain marketplace are also likely to become higher and higher so I expect to see more strategic partnerships between technology and retail, as demonstrated by the recent tie up between Marks & Spencer and Ocado.
What does this mean for our right brain, which is responsible for our impulses, passion and creativity? I don’t think anything processed will stand much of a chance as humans will place increasing value on the human element in the discretionary or value purchase. We are already seeing this with the growth of the artisan marketplace, where we form a human to human relationship with the provider of a product or service. When we can look someone in the eye and hear why their cosmetics, food, drink, or clothes represent something more than utility, we are enthralled. Why? Because humans like to hear stories and we value the authentic over the artificial.
However, we mustn’t forget that the likely effect of the hyper-personalisation of left brain commerce will mean that we will expect our chosen value brands to listen to and understand us, our concerns and ideas.
My own experience working in retail provided a valuable education in the simple concept of learning how to listen. My first job was a Saturday sales assistant in Burton (not the snowboard brand!) now owned by Arcadia, which has just negotiated a lifeline for survival. While I didn’t really enjoy unpacking boxes, putting things on hangers and processing returned items, I found that ‘men’s formalwear’ was a great place to spend Saturdays and school holidays. Why? Because most people were buying their first suit and a little conversation provided me with an easy opportunity to learn more about the individual requirement. Was it needed for a family occasion – the hatch, match or dispatch – a new job, a graduation, or even a court appearance? I learnt that if you were prepared to listen you could respond with far more expertise and be a better advisor.
So twenty years after the dawn of ecommerce, our High Streets are being transformed. Their future is very uncertain but hopefully the next wave of innovation will be in right brain commerce, where we can create environments for interactions and the sharing of stories and ideas. Shops can no longer compete with online in efficiency so they need to become driven by H2H – human to human interaction - and not just the transaction to unlock and satisfy our never ending curiosity.
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